State Report: Food Stamp Fraud, Tax Cuts, Tenants’ Rights + Grants

This week’s State Report centers on legislation aimed at combating food stamp fraud in Rhode Island. Additionally, we’ll look at a newly introduced three-bill package that looks to reduce the tax burden on local businesses. Also on the docket are a series of bills addressing a variety of topics – including animal abuse, social security, and tenants’ rights.

Fighting food stamp fraud

On Thursday, Representative Patricia Morgan introduced legislation that looks to combat abuse of Electronic Benefit Cards (EBT) used in state public assistance and food stamp programs.

The bill's provision

According to Morgan’s bill, EBT users would be required to present photo ID when making purchases.

“To sell their benefit, the recipient must give the card to the illegal purchaser,” said Morgan. “Since the card has the recipients name on it, requiring any person using an EBT card to present photo ID would help stop the abuse. This does rely on retailer staff to check the identification, and this is difficult to ensure. But this is a preventive measure that we expect can be helpful in curtailing fraud.”

Morgan’s Argument

“I don’t know anyone who doesn’t want to make sure that those in need have adequate food, and that their children go to school with full stomachs. But EBT fraud and abuse steals from the system, and the benefits don’t go to where they are most needed,” Morgan added.

Requiring photo IDs would do much to identify and correct abuses, and is a cost-effective way of dealing with the problem said Morgan.

“Approved photo IDs are commonplace, individuals can obtain one at no cost if they do not have one, and this requirement does not need a huge bureaucracy behind it to make it work,” Morgan said.

Similar Legislation

Morgan’s proposal is similar to a bill filed this week in Congress by Senator David Vitter of Louisiana. Under his proposed “Food Stamp Fraud Prevention and Accountability Act,” anyone caught using someone else’s EBT card illegally would be banned from the Supplemental Nutrition Assistance Program.

“Taxpayers are willing to help people in need, but they are not willing to pay for luxury items. By putting these prohibitions into law, we give our law enforcement officials more tools to prosecute this abusive practice.

“It is common sense to tighten up the use of EBT cards. We should all agree that zero-tolerance for fraud and abuse works to the benefit of all involved,” she said.

Instances of fraud and abuse

Recent arrests by the State Police have shown that EBT cards are involved in a wide variety of fraudulent transactions. Cards are routinely sold at a discount for cash, or stolen and used by unauthorized persons. In one instance, an EBT card issued to an inmate at the ACI was being used fraudulently by another family member.

EBT fraud is commonplace, with the costs reaching into the millions. The U.S. Dept. of Agriculture, which supervises the national food stamp program, estimates that losses from abuse are in the neighborhood of $750 million annually, a figure which has doubled since 2008.

Check out the slideshow below for more legislative news from the past week.

Related Slideshow: RI State Report: More News of the Week - 2/1/14

Tax Cuts for Businesses

Senate Minority Whip David E. Bates introduced a package of bills this week aimed at reducing the tax burden on Rhode Island businesses.

“Improving the economy has been at the top of everyone’s priority list,” said Bates (R-Dist., 32, Barrington, Bristol, East Providence). “These three proposals offer concrete ways for small businesses to lessen their tax obligation.”

Under the first proposal, a taxpayer would be exempt from tax on 100 percent of the gains from the sale of a capital asset beginning in 2017, provided the asset represents an ownership interest in a business incorporated in and has headquarters based in Rhode Island. To qualify for the exemption, the asset must be worth at least $10,000 and represent a new interest in the business.

Senate bill (2014-S 2062) would exempt new businesses from paying the state franchise tax, which can be up to $500, for the first three years of its incorporation. The legislation would also give a $100 credit toward the franchise tax for each employee the business has, up to $400.

The third bill in the package, (2014-S 2065) would exempt the first $921,655 of a person’s estate from the state’s death tax. Currently, estates valued at less than $921,655 are exempt, but those exceeding that limit will be taxed on the total value of the estate. Bates’ bill would apply the tax only to the amount over $921,655, instead of the entire value.

Social Security Bill

Sen. Edward J. O’Neill has filed a bill that would exempt social security benefits from the state income tax. Currently, 28 other states and Washington D.C. exempt social security income – including monthly retirement, survivor or disability benefits – in whole or in part from state taxation.

“Older people don’t just relocate to Florida for the sunshine,” said O’Neill (I-Dist. 17, Lincoln, North Providence, North Smithfield). “We are losing population each year to tax-friendly states. While we are doing everything we can to cultivate a better business environment and market our most precious assets to the world, we also need to ensure the protection of those who have lived their lives here and wish to retire comfortably in a place they’ve come to call ‘home.’ Exempting social security in this case would provide a small token of appreciation for our older Rhode Islanders, who still spend money and help fuel the economy in different ways. We want them to know without a doubt that we value them.”

According to the U.S. Census Bureau’s Population Estimates Program, 15.1 percent of Rhode Island’s population are age 65 and older. Since Rhode Island income tax is based on the federal Adjusted Gross Income (AGI) from federal returns, social security benefits are allowed to be taxed through the state based on several different factors, including age, type of benefits, marital status and other variables. Rep. Patricia L. Morgan (R-Dist. 26, West Warwick, Coventry, Warwick) has filed the House companion bill.

Protecting Tenants from Improper Eviction

Rep. John G. Edwards (D-Dist. 70, Portsmouth, Tiverton) and Sen. Harold M. Metts (D-Dist. 6, Providence) have filed bills that would prevent banks from evicting tenants living in foreclosed homes until they sold the house to a new owner.

Currently, tenants living in foreclosed homes have only 90 days before the foreclosing lender can evict them without cause. Under the language of the new bills, that new owner would have to be a non-financial institution in order for an eviction of that nature to take place.

“I introduced this bill six years ago when I met a neighboring family in Tiverton who lived in a foreclosed home,” said Edwards. “Their situation shed light on the fact that our laws regarding tenant eviction and foreclosed homes disrupt the lives of hard-working families and individuals. The legislation Senator Metts and I have introduced not only protects those tenants, but breeds positive support from the local community. Renters need time to save and plan a clean exit, while cities and towns need to clamp down on vandalism and theft in empty buildings. This isn’t just about the foreclosure crisis in Rhode Island. It’s also about keeping people off the streets in tough economic times. We need to do what’s right here to ensure the people of Rhode Island have proper protection.”

According to Housing Works RI – a coalition of more than 140 organizations working toward ensuring quality, affordable homes for all Rhode Islanders – there were more than 9,600 foreclosures filed in this state between the first quarter of 2009 and the second quarter of 2013. Of those filings, more than 2,800 were multi-family foreclosures.

Tax Cuts for Startup Businesses

Sen. Sheehan (D-Dist. 36, Narragansett, North Kingstown) has introduced legislation that would suspend the imposition of the minimum business corporation (franchise) tax of $500 for a period of three years from the date a business incorporates with the Secretary of State.

Under existing tax structure, all Rhode Island businesses face a minimum $500 per year corporations tax.

“This legislation is intended to help small, start-up businesses in our state, the kind that we have been trying to attract through the various reforms and initiatives that have been enacted into law the past few years,” said Sheehan. “If we are putting out the welcome mat to new companies, the last thing those firms need is to find a bill tucked under it, charging them $500 just so they can be in existence. That’s money a new company could better use to build their business.”

“Reducing the cost for small businesses to operate and eliminating fiscal impediments for individuals considering opening a business here should be our goal,” he added.

Animal Abuse Registry

Rep. Dennis M. Canario (D-Dist. 71, Portsmouth, Little Compton, Tiverton) has introduced legislation, 2014-H 7019, to require that persons who have been convicted of felony animal abuse to annually register with the local police department for 15 years, and to require that the local police department provides public notification of the abuser’s identity, registration and personal information.

“Individuals who are animal abusers rarely stop after one incident. Even if they have been convicted of a felony animal abuse offense and are prohibited from owning another animal, they often live in neighborhoods or communities where they are surrounded by family pets,” said Canario.

The Canario legislation would define an animal abuser as any person over the age of 18 who has been convicted of a felony violation of any Rhode Island animal protection law, or of any comparable statutes of another state. The bill would require the Attorney General to maintain a central registry, which would be available to the public through Internet, telephone, written or in-person access.

In some states, proposals for the registries have followed news reports of cruelty to animals, such as in Michigan, where Logan’s Law was proposed after a Siberian husky named Logan had battery acid poured on his muzzle, and in Massachusetts, following the arrest of a man accused of torturing and beating a year-old pit bull he then left for dead in a playground.